Markets are usually quiet in the summer months, but this year was an exception. We had another lively week, focusing on the Jackson Hole symposium. Jay Powell reiterated the Fed’s determination to bring inflation back to target and left the door open for all eventualities.

The US dollar broke above resistance and pushed higher for another week. PMI data came in weak and next week’s wage figures should be crucial for the dollar. Last week, the DXY index rose 0.7% and closed at 104.187.

The Euro is starting to lose more ground as economic data for the Eurozone weakens (especially in Germany).

Sterling sold off against most majors after UK PMI data came firmly into contraction territory.

Commodity currencies had a fourth negative week in a row, although this time it was only a small pullback lower. The AUD remained flat against the USD, while the NZD, NOK and CAD fell about 0.5%. Elsewhere in FX, CHF fell 0.2%, JPY dropped 0.7%, but MXN was again a powerhouse with a 1.8% rally.

Oil experienced a second negative week in a row, mainly driven by deteriorating global economic data and projections for falling demand. Last week, WTI fell 1.7% and closed just below the $80 level.

Precious metals had a second strong week in a row and performed much better than expected given rising yields and USD. Gold rose 1.3% and closed at $1,914 and silver rose more than 6% and closed at $24.22.

Equities found some support as interest rates did not rise further. Last week, the S&P500 index rose 0.9% and closed at 4,404 points and the DAX rose 0.7% to 15,684 points.

Bonds traded mostly sideways and closed the week largely unchanged. The yield on the 10y UST fell 1 bp to 4.24% and the 10y Bund rose 0.6% to close at 132,121 points.

Finally, cryptocurrencies are trying to find support after last week’s sharp move. Is this a short-term consolidation for a lower continuation? That is a likely scenario. At the time of writing, Bitcoin and Ethereum are unchanged this week, at $26,000 and $1,650 respectively.

The week ahead:

Markets are digesting Jay Powell’s Jackson Hole comments and we are certainly heavily data-dependent for the future. This makes next week’s data releases extra important! We have Eurozone CPI data, and US GDP, ADP and NFP, among others.

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